“There’s downward pressure on marketing spend overall," said Yahoo!7 chief executive
Stuart Sayers
, who took over the role in September after being chief operating officer.

Internet portals like Yahoo!7 and Mi9’s ninemsn have come under pressure due to a weakening advertising market and the proliferation of offshore online media companies targeting ­Australian eyeballs and ad dollars.

“It’s a lot more competitive now than two or three years ago," said Mr Sayers, who added that Yahoo!7 faces ­“thousands" of rivals.

Yahoo!7’s main weakness was in its group buying business, Spreets. Fees revenue (mostly Spreets) fell 42 per cent to $21 million. The company wrote down the value of Spreets by $30 million, after paying less than $40 million for the asset in 2011. The write-down led to an $18 million loss for 2012.

Mr Sayers said he expected ­“irrational" pricing in the group buying sector to continue for some time.

He blamed Spreets’ poor performance for a $7 million drop in earnings before interest, tax, depreciation and amortisation (EBITDA) to $34 million.

However, marketing services ­revenue, which is virtually all online display, rose 12 per cent to $88 million. “Display is going well for us," he said of the company’s core business.

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Yet it is understood Yahoo!7 lost market share in display in the last quarter of 2012.

This partly explains why Yahoo!7’s strong growth rates in the 12 months to June 30 – 27 per cent for revenue and 20 per cent for EBITDA – as outlined in SWM’s accounts were reversed in Yahoo!7’s accounts for the 12 months to December 31.

It is believed SWM has been pondering the future direction of its joint ­venture with Yahoo!.

Yet Mr Sayers said Yahoo!7 sourced “great content" from SWM, which owns the Seven TV Network, and would benefit from Yahoo!’s relaunch of photo website Flickr and its acquisition of social networking site Tumblr.